UK Treasury opens tax policy consultation on DeFi staking and lending

Quick Take

  • The UK is moving toward a new tax regime for staking and lending on decentralized protocols.
  • The proposed framework would also be applied to third-party crypto staking and lending platforms. 

HM Treasury, the UK's finance ministry, said Thursday that it has opened a consultation on possible new tax regulations for decentralized finance activities.

In particular, the Treasury is focused on lending and staking — two key activities in the DeFi ecosystem. The Treasury said it wants to "create a regime that better aligns...with the underlying economic substance, whilst reducing the administrative burden on users," the Treasury said in its announcement."

The Treasury's notice went on to say:

"Under the proposed changes, the use of cryptoassets in DeFi transactions would no longer be treated as giving rise to a disposal for tax purposes. Instead, a tax disposal would arise when the cryptoassets are economically disposed of in a non-DeFi transaction."